Category Archives: American Economy

Climate of Fear XXI.

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Used to be, presidential candidates could just say “I stand for the principles of the Whig Party” and let it go at that.[1]  Now, a presidential election campaign requires candidates to lay out their plans for examination by voters.[2]

Hillary Clinton has begun to do so.  One key area is climate change.  Here she seeks to reach beyond the goals set by the Obama administration.  President Obama believed that emissions had to be reduced, so he ordered the EPA to use the Clean Air Act to issue regulations that would compel vehicles and power plants to cut emissions by 25-28 percent below the 2005 level by 2025, and by 80 percent by 2050.

According to many economists, a carbon tax would be highly effective in reducing emissions.  Indeed, the goals for 2050 and perhaps even those for 2025 can’t be reached without a carbon tax.  It would drive up the price of carbon fuels above the price of alternative fuels, creating a market demand for those alternative fuels.  This, in turn, would shift the terms for solar and wind energy while stimulating a demand for mass transportation.

However, it would hit hard on ordinary consumers by raising gas and electricity prices.  So, Ford F-150s, “Mommy vans,” and air conditioning would all become prohibitively expensive.[3]  Such voters would become angry, angry hippos and—in an act of false consciousness[4]—vote Republican.  Clinton has rigorously avoided proposing a carbon tax.

Conceding that the Democrats are unlikely to win control of both houses of Congress (perhaps not even one), she envisions acting on climate change without legislation.  Clinton believes that “meeting the climate challenge is too important to wait for climate deniers in Congress to pass comprehensive climate legislation.”[5]  She would use the Clean Air Act to issue regulations that would reduce emissions by airlines, oil refineries, gas wells, and cement plants.

What might such action accomplish?  She hopes to raise the number of solar panels from about 70,000 today to 500 million by 2020.  She wants to spend $60 billion on mass-transit and energy-efficient buildings.  Experts believe that the Obama Administration already has done just about everything that administrative regulations can achieve, even if the courts allow all of them to remain in effect.  Taken all together, her energy proposals will cut greenhouse gas emissions by 80 percent of the 2005 level by 2050.  That is, the same mark as that set by the Obama administration.  Furthermore, a Clinton administration would need to get at least $60 billion in appropriations through Congress.  This seems equally unlikely to be achieved.

Nevertheless, Clinton has won some support from the environmental community, which sees the danger of climate change as more pressing than any other danger.  “We know that [a carbon tax] is not politically realistic.  And we need to be realistic about what we can get,” said Scott Hennessey, vice president of the solar power company SolarCity.[6]

The real issue is the American unwillingness to be taxed, rather than “climate deniers.”

[1] See: https://www.youtube.com/watch?v=UAjwAuHHQJs

[2] Voters in long-established democracies realize that their own candidates are just writing a wish list, but they believe that the other candidate means to try for integral fulfillment of his/her agenda.

[3] Actually, they already are in environmental terms.  It’s just that on one wants to tell people the truth.

[4] See: https://en.wikipedia.org/wiki/False_consciousness

[5] Clinton’s campaign chairman John Podesta, quoted in Coral Davenport, “Clinton’s Climate Change Plan Avoids Mention of a Carbon Tax,” NYT, 3 July 2016.

[6] Which spent a measly $200,000 on the Podesta Group lobbying firm in 2015.  See: http://www.opensecrets.org/lobby/firmsum.php?id=D000022193&year=2014%20Campaign%20Contributions  This was not mentioned in the NYT article.  See n. 5 above.

Campaign Issues 2016 3.

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Hind-sight is 20/20; foresight is not.  The basis of the Affordable Care Act (ACA) lay in a plan to require many younger, healthier, and lower income people to pay premiums that would subsidize the health-care costs of older, sicker, and wealthier people.[1]  Even so, support for the ACA has grown with the passage of time.  In 2013, less than a third (32 percent) approved of the ACA, while 61 percent disapproved.    By July 2015, 47 percent approved, 44 percent disapproved, and only 9 percent “didn’t know.”  Opponents of the ACA have been the big losers here, bleeding away almost a third of their numbers to either supporters or to “don’t know.”[2]

Before the Affordable Care Act (ACA) went into effect, 17.1 percent of Americans had no health insurance.  By 2013, the share without health insurance had fallen to 13.3 percent; in 2014, 10.4 percent of Americans had no health insurance.[3]  By Spring 2015, that number had fallen to 11.9 percent, a reduction of 5.2 percent.[4]  (This seems like a lot of hassle just to reduce the number of uninsured by one-third. )  In March 2015, the Congressional Budget Office (CBO) predicted that 21 million people would have signed up for coverage by state exchanges under the ACA by late 2015. This would be a pretty extraordinary jump: only 9 million people were registered in late 2014.  By late October 2015, only an additional million people had enrolled.

The great thing about a market economy is that it forces sellers of any good to find a price that is high enough for them to make a profit and low enough to attract customers.  The first years of the ACA have seen insurers searching for that sweet spot.[5]  One big problem is that many people remain outside the insurance market, regardless of the individual mandate.  The newly-insured have turned out to be sick people, rather than a broad range of the population.  Costs for insurance companies have gone up more than have income from premiums.  As a result, health insurance premiums rose by 5 percent for 2016.  Now, major insurance companies are seeking an average 10 percent increase in premiums for 2017.[6]  (The desired rates for Washington, DC and New York City are 16 percent.)  At some point, the insurance companies will find the right price.  Where is that price?  Will premiums continue to rise after 2017?  It’s difficult to say.  Why do uninsured people not enroll?  Young, healthy, and less-well-off people seem to be staging a libertarian revolt against the mandate that everyone have health insurance.

The ACA is a substantial extension of the entitlements safety-net for the benefit of poor people at the expense of not-so-poor people.  The federal government subsidizes to varying degrees many of the insurance premiums.  This means that higher premiums will increase federal spending on health care.  At some point, even in America, taxes are going to have to go up to pay for spending or spending is going to have to come down to what the country is willing to pay.[7]  However, people with higher incomes who buy insurance on the market-place lose the subsidies, so they are going to feel the sticker shock.  If it comes to higher taxes, Democrats are going to favor preserving the entitlement by taxing the one-percent, while Republicans are going to favor sending the ACA in front of a “death-panel.”

[1] This sounds like a Republican plot, but Republicans had no voice in the ACA.  This is all Democrats.

[2] “Poll Watch,” The Week, 10 July 2015, p. 17.

[3] “Noted,” The Week, misplaced the exact reference.  Sorry.

[4] “Noted,” The Week, 24 April, 2015, p. 16.

[5] Reed Abelson and Margot Sanger-Katz, “Obamacare Premiums Are Rising, Not a Little,” NYT, 16 June 2016.

[6] These sorts of developments have been predicted by Republican critics from the beginning.  Some of them have predicted that it will end in a “death spiral” as rising premiums force people out of the market.   Democrats derided this as partisan fear-mongering.

[7] I realize that this is a disturbing new way of looking at things.

Campaign Issues 2016 2.

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Republicans say that the “War on Poverty” has been lost.[1]  Democrats say that it hasn’t been won, yet.  According to the New York Times, the conservative stereotype of poor people is that they’re criminals or they’re lazy.[2]  According to conservatives, the conservative stereotype of poor people is that they’re intelligent and entrepreneurial, but that liberals have created a set of incentives to dependency.  Is there any indication of who is more nearly correct?

According to the Census Bureau,[3] in 2011, there were 76 million families.  Of these, 55.5 million consisted of married couples, and 20.5 million consisted of Other families.  Among those Other families, 5.4 million were male-headed and 15.1 million were female headed.  So, 73 percent were married couples and 27 percent were Other families.  Among Other families, 73.6 percent were female-headed households and 26.4 percent were male-headed households.

White, non-Hispanics accounted for 52 million of the households.  Of these, 41.5 million consisted of married couples and, 10.5 million consisted of Other families.  Among those Other families, 3 million were male-headed and 7.5 million were female-headed.  So, 80 percent were married couples and 20 percent were Other families.  Among Other families, 71 percent were female-headed households and 29 percent were male-headed households.

African-Americans accounted for 8.7 million of the households.  Of these, 3.8 million consisted of married couples and 4.9 million consisted of Other families.  Among those Other families, 800,000 were male-headed and 4.1 million were female-headed.  So, 43 percent were married couples and 56 percent were Other families.  Among Other families, 83 percent were female-headed and 17 percent were female-headed.

Married couples are much less common among African-Americans (43 percent) than among White non-Hispanics (80 percent) or the national average (73 percent).  Other families are much more common among African-Americans (56 percent) than among White non-Hispanics (20 percent) or the national average (27 percent).  Female-headed households are somewhat more common among African-Americans (83 percent) than among White non-Hispanics (71 percent) or the national average (73.6 percent).  African-Americans account for 27.1 percent of the female-headed households, while African-Americans account for about 14 percent of the population.

Current anti-poverty programs include food stamps, housing subsidies, and various tax-credits like the earned-income tax credit and the child tax credit.  People can obtain these benefits provided that they remain poor.  Raise your income and lose the benefits.

Back in 1965, Daniel Moynihan published The Negro Family: The Case for Action.[4]  He concluded that “The steady expansion of welfare programs   can be taken as a measure of the steady disintegration of the Negro family structure over the past generation in the United States.”  In short, Uncle Sam displaced black fathers.  While there is a lot to criticize here, it is also possible to argue that part of poverty is volitional: don’t have kids outside of marriage; stay in school and don’t disrupt class, then go to a community college; get a job, even if it is a crummy one; then trade-up to better jobs.  This issue will not be discussed in the 2016 election.

[1] Oddly, they never say that about the “War on Drugs.”  https://www.youtube.com/watch?v=j3SysxG6yoE  It can be argued that the War on Drugs and the War on Cancer were Republican distractions or alternatives to the War on Poverty.

[2] David M. Herszenhorn, “Antipoverty Plan Skimps on Details and History,” NYT, 15 June 2016.

[3] See: https://www.census.gov/prod/2013pubs/p20-570.pdf

[4] See: https://en.wikipedia.org/wiki/The_Negro_Family:_The_Case_For_National_Action.

Campaign Issues 2016 1.

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Currently, Social Security faces two fundamental problems.[1]  One fundamental problem is that Social Security is based on a “pay-as-you-go” model: withholding taxes from people who are working pay for the retirement of people who are no longer working.  Fine.  If there are a lot of people working and a smaller number not working, then the system functions smoothly.  What if the number of people working declines relative to the number of those who are not working?  That’s more of a problem.  Taxes on those still working will have to rise to pay for those no longer working.  That is the situation in which Americans find themselves as the “Baby Boom” generation passes out of the work force and into the work-for-me force.

This problem has been around for a long time and people in authority have been trying to devise a solution for a long time.   In 1983 a bi-partisan commission investigated solutions.  Congress followed the commission’s recommendations by raising taxes and extending the age of full eligibility. That fixed the problem for a while, but—of course–“I’m back!”  In a report of 2015, the trustees reported that the Social Security trust fund will go broke in 2034, with the Social Security Administration able to pay less than 79 cents on the dollar of benefits.  In 2011-2012, President Barack Obama sketched a budget compromise agreement in which Social Security would be continually eroded by inflation.  The Republicans weren’t buying this idea.  Another solution, which could be combined with de-coupling Social Security benefits from the inflation index, would be to raise the cap on with-holding taxes.  Currently, only income below about $134,000 a year is subject to with-holding.  Raising that ceiling would generate a lot of revenue.  Taken together, these proposals probably offer a manageable means to solve the Social Security problem for the immediate future.

A second fundamental problem is that Social Security was never designed to be a full retirement pension.  It was meant to provide a basic income for retirees, who were expected to save from current income to pay for the bulk of their future retirement needs.  However, many members of the “Baby Boom” did not do any significant saving for their retirement.

Now, under the influence of the Bernie Sanders campaign, the Democrats have come out for expanding Social Security to make its benefits more generous.  Hillary Clinton has pledged to increase benefits for widows and for those who stop working to be care providers for children or sick family members; to resist reduction of cost-of-living increases; and to resist increasing the age for full eligibility.  She would pay for these increased benefits through higher taxes on the wealthy.  Still, even these proposals don’t go as far as the left wing of the party wants.  President Obama has remarked that “a lot of Americans don’t have retirement savings [and] fewer people have pensions they can really count on.”  How to make up for this lifetime lack of thrift?

Current proposals include increasing the benefits for all recipients while providing additional benefits for the uncertain number of the “most vulnerable”; and/or increasing cost-of-living adjustments to include medical costs.

Several questions arise out of these problems.  First, which “Baby Boomers” did not save and why did they not save?  Moral recriminations are going to be a part of this debate.  Second, what are these proposals likely to cost?  Third, how large a share of the well-off will have to be taxed more heavily?  Just the “1 percent” or the “5 percent” or anyone who did manage to save?  Fourth, do Americans want to transition Social Security from the current partial pension system to a full-blown national retirement system?   What would a long-term system require?

[1] Robert Pear, “Driven by Campaign Populism, Democrats Unite on Social Security Plan,” NYT, 19 June 2016.

The Rise and Decline of Nations.

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Back in the day–as young people used to say before they moved on to some other expression up with which I have not caught—I was going to be an economic historian. I came across a book by Mancur (Man-Kur or Man-Sur, depending on who your listening to) Olson.[1]  It’s a remarkable book, although—like many another remarkable book—long forgotten.

At the core of the book is a puzzle.  Germany and Japan lost the Second World War big time, while the United States won big time.  So how come the post-war German and Japanese economies were so dynamic, while the American economy slowed down?

Olson’s answer is one that will be obvious to sailors.[2]  You leave the boat in salt-water and it will pick up barnacles.  It also will be obvious to heart surgeons.  You have too many double bacon cheeseburgers with the twisty fries covered in BBQ sauce and your arteries will get clogged with sludge.  In either metaphor, the system gets loaded with stuff that slows down its operation.

What, in economic terms, are these barnacles/sludge?  They are the various interest groups that grow up around an established way of doing things: unions, government regulators, tax collectors, and business monopolies and cartels.  They grow up with—well, slightly behind– any new industry.  They figure out how the system works.  They figure out how to work the system.  They’re opposed to change because they know how to work the existing system.[3]  They fight over shares of the existing pie, rather than over how to expand the pie.  Eventually, the contending groups reach agreement on how to divvy-up the pie.  These agreements Olson labels “distributional coalitions.”  They are the “masters of the crossroads.”[4]

The thing is that the Second World War destroyed all these “distributional coalitions”—the barnacles, the sludge, the interest groups, the barriers to new technology and new relationships–in Germany and Japan.  War “emergencies” caused the German and Japanese governments to break down established relationships from the pre-war era.  Then the American and British occupations banned many regime-associated groups.  In contrast, the victor nations institutionalized their own “distributional coalitions.”  American and British unions foreswore strikes, while lots of leading businessmen took “dollar-a-year” jobs with the government.[5]  Subsequently, many interest groups dug-in to established positions.  So, Germany and Japan were able to achieve rapid economic growth, while the United States merely chugged along and Britain soon fell behind the countries against which it had fought from the first day of the Second World War to the last.

In a sense, then, catastrophic defeat in war serves as a kind of social and economic angioplasty.[6]  Obviously, Olson was talking only about already advanced industrial economies.  I doubt that anyone expects Iraq to be the next “economic miracle.”

Trite observation though it is, the same analysis might be applied to any organization.  For example, colleges facing severe competition either ruthlessly adapt or wither.

[1] Mancur Olson, The Rise and Fall of Nations: Economic Growth, Stagflation, and Social Rigidities (Yale UP, 1984).

[2] Nevertheless, will all the non-sailors please spare me the abusive remarks about me wearing pink—“salmon” in the imagination of my brother-in-law—pants, blue Polo shirts, and Topsiders?  Please?

[3] Big Carbon—coal and oil—has a lot more drag with the gummint than does Not-So-Big Renewables.

[4] See: https://en.wikipedia.org/wiki/Papa_Legba  See also: Madison Smartt Bell, All Souls’ Rising (1995); Master of the Crossroads (2000); and The Stone That the Builder Refused (2004).

[5] See, for example, Alan Brinkley, The End of Reform: New Deal Liberalism in Recession and War  (1995). 

[6] Curiously, this is how mainstream economists saw a business-cycle recession before the Great Depression.

Watch List.

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The federal gummint’s terrorist watch list has crested at about 800,000 names.[1]  The vast majority of these people are foreigners.  Many are candidates for drone strikes.  Most never seek entry to the United States.  That would just end in a flight to Guantanamo.  The “no-fly” list contains the names of about 64,000 people who will not be allowed to board airplanes bound for the United States.   “Only” about 25,000-40,000 of the people on the list are Americans.  People on the terrorism watch list who try to buy guns are automatically flagged for further FBI investigation.  In 2015, the names of 244 people who were on the watch list were sent to the FBI when they tried to buy guns.  Apparently, that further check really amounts to applying the normal standards for buying a gun: no history of involuntary commitment for mental illness and/or no criminal record.  (So, how does someone with no interest in buying guns get on the watch list?  If I went around denouncing the US Government in scurrilous terms, I’d want to have guns for when they got pissed off.[2])

In December 2015, the Senate Democrats offered a bill to give the Attorney General the power to deny the sale of a firearm or an explosive “to a known or suspected terrorist.”  Critics of the whole watch list thing point out that inclusion on the list is an administrative decision, while there is virtually no way to appeal against the decision.  The Republicans countered with a bill to delay sale for 72 hours to enable the FBI to investigate the purchaser.  Neither bill mustered a majority.

Had the Democrats’ bill passed, Omar Mateen would still have been able to purchase the weapons that he used in the Orlando massacre.  On the one hand, “suspects” are investigated by the FBI.  If the FBI concludes that they are not a current threat, then they are removed from the list of people banned from purchasing firearms or explosives.  On the other hand, there is a more or less “black market” for guns to be had on the internet from private dealers.

Perhaps long experience with the ineffectiveness of government regulation explains why Republican support for tighter gun laws fell from 55 percent in March 2000 to 26 percent in July 2015.  In any case, in states with Republican majorities in the legislature, mass shootings actually are followed by a loosening of gun laws.[3]  Conservatives throw up a smokescreen of rationalizations when their real concern is that liberals will try to disarm the country.[4]

One of the sources of the bitter partisanship that has disabled American democracy is revealed in a comment in a New York Times article.  “The “legislation does not specifically require that someone be named on a particular watch list to be considered a known terrorist or a suspect, so it is possible that Mr. Mateen could have been flagged under other procedures implemented by the attorney  general.”  Yes, yes, yes, the Justice Department says that this means that people once on a watch list and subsequently removed could still be banned.  However, what springs to mind in this post-Patriot Act/post-Snowden age is that an endlessly expanding list of people not allowed to buy guns will be created by presidential ukase.  Like work permits for illegal immigrants.  Like the assertion that the War Powers Act does not apply in Libya.

[1] Alicia Parlapiano, “How Terror Suspects Buy Guns—and How They Still Could, Even With a Ban,” NYT, 16 June 2016.

[2] See an over the top account in https://en.wikipedia.org/wiki/Fred_Hampton

[3] Neil Irwin, “After Mass Shootings, It’s Often Easier to Buy a Gun,” NYT, 16 June 2016.

[4] Yet national disarmament—as in Britain or Australia—is the only real means to reduce gun deaths.  The president needs to speak the truth, rather than run from it.  Same goes for drugs, taxes in the middle classes, and a carbon tax.

Nostalgia.

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“Compared with 50 years ago [i.e. 1966], life for people like you in America is worse.”  Agree or Disagree.[1]

 

Almost half (46 percent) of voters agreed with this statement.  The distribution was pretty much balanced between men (45 percent) and women (46 percent).  Fifty years into Women’s Lib and almost half of women think that life for people like them is worse?  Maybe the half of guys who think that life is not worse are married to the women who think life is worse, while the half of women who think life is not worse are married to the guys who think that life is worse.  Or perhaps gender isn’t the salient identity for men and women.  Maybe race or social class is more important.

Thereafter, the distribution breaks down in interesting ways.

While a majority of whites (54 percent) think that life is worse, only 17 percent of blacks think that life is worse.  Despite all our failings and short-comings, the Civil Rights movement and the government policies which it compelled is a huge success.  Do whites feel worse off because blacks don’t feel worse off?  Not likely: too few people lost anything from the formal end of white supremacy.  America remains largely segregated; and black people remain at a lower income than do whites.

Better than half of people who actually were alive 50 years ago think that their condition is worse: 55 percent of people aged 65 or older and 53 percent of people aged 50 to 64.  Presumably they know what they’re talking about.  The first group was born before 1952; the second group between 1952 and 1966.  Then the sense that things are worse is higher for those with only some college (49 percent) and high school or less (51 percent) than for those with a BA (39 percent) or post-graduate education (37 percent).[2]

The sense of decline is much stronger among Republicans than among Democrats. Some 70 percent of self-identified Conservative Republicans and 58 percent of Liberal/Moderate Republicans think that life is worse.  In contrast, only 20 percent of self-identified Liberal Democrats and 35 percent of Conservative/Moderate Democrats think that life is worse.

American real incomes, life span, and medical care are much better than 50 years ago, so it is likely to be something else that gives them the sense of decline.  It is more than likely that the discontent among older people/white people/Republicans springs from factors like the impact of economic globalization and the advance of information technology, but also from the long string of domestic and international reverses.[3]  Perhaps this is an artifact of the Republican Party having progressively captured the heart of the old New Deal coalition (Southerners, the Northern working class) over the last 50 years.

Is it possible that the next election(s) will be a struggle between those who have lost from the big changes that have overtaken America and those who have at least survived them unscathed?  Will it be a struggle between Nostalgia for a by-gone age and Complacency about the new age?  That seems a poor basis for deciding the fate of young people in the face of what looks to be several decades of grave challenges at home and abroad.

[1] Charles M. Blow, “A Trump-Sanders Coalition?  Nah,” NYT, 2 May 2016.  OK, it’s Charles Blow.  Still…

[2] Still, better than a third of people with a post-graduate degree think that life is worse?  They can’t all be college professors.

[3] I just finished Gregg Herken, The Georgetown Set, and now I’m listening to Thomas Friedman and Michael Mandelbaum, That Used to Be Us.  So, those books probably are shaping my interpretation.

Annals of the Great Recession XIII.

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A couple of polls from back in late 2015 may give some indication of fundamental beliefs that will play out in the general election in November 2016.

Back in September 2015, almost half (49 percent) of Americans saw the free-market as the best escalator out of poverty, while a mere 18 percent disagreed.[1]  That still leaves a disturbing 33 percent “not sure.”  Similarly, when asked if the American economic system gave everyone an equal chance to succeed, 52 percent said that it did, while 45 percent said that it did not.[2]  This second report is bizarre.  Do most Americans really believe that the children of upper middle class suburban whites have an equal chance to succeed as a fifteen year-old black girl living with her mother or grandmother in North Philadelphia?  Perhaps it depends on the meaning of “success.”  No two people have an equal chance to end up in the same place, but perhaps they have an equal chance to improve on their starting position.  Perhaps it reflects a belief that people don’t have an equal chance, but that if you admit that there is a problem, then the Democrats or Republicans will come up with some new scheme that doesn’t work any better than the previous ones.  In any event, faith in capitalism has been undermined—by capitalists.

Just under half saw the economy as good, but a plurality saw it as stagnating.  That is, the country had recovered from the “Great Recession,” but it wasn’t moving forward to new heights.  Why was it stagnating?  Not for the reasons that Bernie Sanders might think.  On the issue of government regulation’s impact on the economy, 54 percent said that it posed a more urgent danger than did economic inequality, while 38 percent said that too little regulation posed a more urgent problem.  Republicans and a majority of Independents believed that the Republicans would do a better job managing the economy and creating jobs.[3]  This in the wake of the financial crisis, the “Great Recession,” and Republican opposition to a big stimulus bill!  How is this possible?  Well, perhaps things like the roll-out of Healthcare,gov have made lots of people go “even those idiot Republicans would be better than these clowns.”  Democrats and a minority of Independents beg to differ.  On the question of priorities, the vast majority (61 percent) saw unemployment as a greater problem than inequality (12 percent).[4]  Since the “Great Recession,” Democratic politicians and their favorite economists have been talking about the injustices and economic problems created by income inequality.  Broadly, Americans weren’t buying it.  Get the economy growing again and the inequality stuff will go away.

Wall Street’s reputation hadn’t recovered from the financial crisis.  A large majority (61 percent) expressed Not Much (29 percent) or No (32 percent) confidence in Wall Street bankers and brokers.  Almost a third (31 percent) expressed only Some confidence.  Related to this lack of confidence in Wall Street itself, a majority (58 percent) expressed Not Much (34 percent) or No (24 percent) confidence in the ability of the federal government to regulate financial institutions.  Again, almost a third (31 percent) expressed only Some confidence.  Perhaps this is one source of the distrust and unpopularity of Hillary Clinton?  We know that the Republicans are sold to the big money, but it’s disconcerting to see the guardian of Main Street “walking hand in hand with the one I love.”[5]

[1] Tim Montgomerie, “A Fading Faith in Capitalism,” WSJ, 7-8 November 2015.

[2] Andrew Ross Sorkin and Megan Thee-Brenan, “Many Feel American Dream Is Out of Reach, Poll Shows,” NYT, 11 December 2015.

[3] Then how come Romney didn’t win?  Because, although a very nice and accomplished man, he was an incredible bust as a national level politician?

[4] Montgomerie, “A Fading Faith.”

[5] See—if you can bear it– https://www.youtube.com/watch?v=iVpqtsy1o_4

Really? Really?

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Security lines at American airports have grown longer, delays have increased[1], and it looks to get worse as the summer travel season occurs.[2]  Why did things get worse?  Is there anything that can be done about the problem?  Are there any larger lessons to be derived from this unpleasant experience?

Since 2011, the number of air travelers has increased by 12 percent, while the number of screeners has declined by 12 percent (5,702).  More travelers x fewer screeners = longer lines at airports.  OK, that’s simple.              Congress hastily appropriated $34 million to hire 768 new screeners.[3]  Part of the decrease in the number of screeners comes from the “promotion” of the cream of screeners into a behavior detection unit.  Loosely modeled on Israeli airline security, the group has been of doubtful utility.  More importantly, people don’t like working as TSA screeners: they lose about 35 percent of their workforce every year because they quit.[4]  You think it’s boring standing in lines, taking off your belt, shoes, under-wire bra to pander to the latest case of the vapors?  Try sitting for eight hours staring at a little screen at something not produced for X-tube.

Recently, the Inspector General of the TSA humiliated the agency by releasing a report that showed that TSA screeners had missed a bunch of potential security threats.  The TSA responded by enforcing strict fulfillment of regulations.[5]  These same regulations apply to private screeners employed in many airports, so going private will not solver anything.

Senators Edward Markey and Richard Blumenthal, Democrats both, have suggested that the problem created by the publicly-owned federal bureaucracy could be partially addressed by penalizing the privately-owned airlines.  They want the airlines to end the charge for checked baggage to speed up processing of carry-on baggage.

Jeh Johnson, the head of the Department of Homeless Security, announced that the Department would increase the hours of overtime that it would pay,[6]  hire more screeners, and increase the use of bomb-sniffing dogs.[7]  Even so, airline travel in Summer 2016 is going to be even more awful than usual.

This “minor”—I’m not flying anywhere this summer, so it’s minor—catastrophe engages several issues.  First, private industry failed on 9/11, so the government substituted a federal agency that isn’t any better.  The TSA doesn’t track industry trends or communicate with the airlines in order to facilitate travel?  If Yes, why didn’t they respond in a timely fashion?  If No, why is that?  Second, labor unions employ “work to rule” as a non-strike slow-down technique in bargaining.  Here it is being employed by a federal agency against its critics. Without anyone being fired.  Third, this is how Bernie Sanders wants the whole American economy to run.

[1] At Chicago’s O’Hare airport, 6,800 Eastern Airlines passengers missed their flights in March 2016, including 450 passengers in one day.

[2] Ron Nixon, “Behind the Backups at Airport Security,” NYT, 19 May 2016, .

[3] That averages out to a unit cost of $44,200 each.  Presumably, this includes federal benefits.  So, what do you think, about $33-35,000 in base pay, plus about a quarter in benefits?  Sounds about right for former high school custodians.

[4] “Anger mounts at TSA over airport security chaos,” The Week, 27 May 2016, p. 5.

[5] So travelers are being punished for the failings of the TSA?

[6] So the number of tired, bored people looking for threats on your flight will increase.

[7] You ever wonder if terrorist scientists are working on dog-sniffing bombs?  “He, King, whadda ya smell?  BOOM!”  Anyway, the Brussels airport bombing shows that bombs in the lobby can also be highly effective.  What caused the greater uproar, the Brussels bombings or the loss of the Egyptian airliner?

Expect the Unexpected.

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Change and innovation lead to un-foreseen effects.  Caller ID allows people to tell whether they are being called by someone they know or by some unknown person.  If the call comes at the dinner-hour, it’s 99.9 percent sure to be somebody trying to raise money for the local fire department or somebody conducting a survey.  In either case, most people don’t want to talk to the caller.  In 1997, the response rate to telephone surveys was a measly 36 percent (unless you count “Go to Hell!” as a response).  By 2014 it had fallen to 9 percent.[1]  How exactly is anyone supposed to measure public opinion if the public won’t give it?  Hard for politicians to pander to the voters if they don’t know what the voters want to hear.  Maybe they’re stuck pandering to the donors?  We could end up back in the land of “Dewey Beats Truman!”

“Baby Boomers” are entering the “golden years.”  One natural response to having the kids out of the house is “downsizing” to a smaller home or an apartment.  Lots of older people with—comparatively—lots of money are entering the market for smaller homes and apartments.  This pushes up the price of what used to be “starter homes” (now to be re-labeled “finisher homes”?) and the rent for apartments.  Between 1995 and 2005, the average share of income devoted to rent was 24 percent.  By Summer 2015, it had risen to 30.2 percent.[2]  This is likely to make things more difficult for younger people with—comparatively—less money.[3]

The “fracking revolution” has brought down energy prices.  (By August 2015, they were at a six-year low.)  The fall in energy prices has damped down inflation.  Low inflation means that—for the third time since 2010—Social Security recipients will see no increase in their benefits.  On the other hand, Medicare premiums are not linked to the inflation rate.  So these will rise in 2016.[4]  The disposable income of retirees is likely to shrink.

When energy (if not yet the climate) became a grave concern back in the 1970s, a sustained drive got underway to make all sorts of things more energy efficient.  Today, American houses are 31 percent more energy efficient than they were forty years ago.  On the other hand, American homes are 57 percent larger than they were forty years ago.  In the 1970s the average American home was about 1,300 square feet.  In 2012 the average American home was 1,864 square feet.  The most recently built homes are averaging 2,657 square feet.  This cancels out the gains in efficiency.[5]  Several puzzles arise.  Where does the extra space go?  Garages?  Bigger bedrooms for the kids?  A bathroom every ten feet?  Why are homes larger when families are smaller?  What is it like to live in one of these homes?  Do family-members retreat into their own space and close the door?  Is the same thing true of the improved gas mileage of cars?  Is efficiency improved, but we drive more?

The current, much-discussed surge in opiod addiction has led to a surge in deaths from drug overdoses.  That, in turn, has led to a rise in the number of organ donors.  They now provide better than ten percent of all organ donations, up from about 3 percent in 2006.[6]  So, higher death rates for some mean longer lives for others.

After the San Bernardino terrorist attack liberals characterized the attack as a “mass shooting” and called for tighter gun controls. Unlicensed gun-dealers, a common “bete noire” of gun control advocates, came in for special presidential attention.  Gun sales zoomed upward.  In December 2015, Americans bought 3.3 million guns.  All of these sales have been from licensed gun-dealers because the government background check system has been swamped.  Attorney General Loretta Lynch has asked for the hiring of 430 additional people just to process the background checks of Americans complying with the existing gun laws.[7]

The Americans with Disabilities Act bars discrimination against people with disabilities.  Some of this is left open to interpretation by government officials.  As a result, the state of Iowa will issue gun permits to blind people.[8]

Should these random reports make people cautious in regarding business plans, campaign platforms (“The New” Anything), or succeeding at their New Year’s Resolutions?  Just asking.

[1] “The bottom line,” The Week, 5 September 2014, p. 32.

[2] “Noted,” The Week, 28 August, 2015, p. 14.

[3] “The bottom line,” The Week, 15 October 2015, p. 36.

[4] “The bottom line,” The Week, 30 October 2015, p. 36.

[5] “The bottom line,” The Week, 20 November 2015, p. 32; “Noted,” The Week, 27 November 2015, p. 16.  .

[6] “Noted,” The Week, 20 May 2016, p. 18.

[7] “Noted,” The Week, 5 February 2016, p.8.

[8] “Noted,” The Week, 20 September 2013, p. 16.